Fidelity Bank grows deposit to N829.9b in H1 2016

Fidelity Bank Plc, one of Nigeria’s highly diversified financial institutions has announced its unaudited results for the half year ended June 30, 2016, disclosing that its deposit base grew to N829.9 billion from N769.6 billion in 2015 Financial Year.

This represents a 7.8 per cent increase for the period under review. Also, the bank’s net loans rose by 23.0 per cent from N578.2 billion to N711.0 billion, demonstrating its unwavering commitment towards supporting critical sectors of the economy.

 

According to the lender’s financial statement for the period under review, Fidelity posted a decline of 2.6 per cent and 35.0 per cent in its gross earnings and Profit Before Tax (PBT) respectively.

 

Whereas total assets increased by 13.5 per cent to N1, 397.9 billion from N1, 231.7 billion in 2015, total equity remained flat at N183.5 billion. While total expenses rose by 10 percent to N31.7 billion from N28.8 billion in H1 2015, operating income increased to N43.6 billion from N42.0 billion in the preceding year, representing a 3.6 per cent rise.

 

Commenting on the overall result, Managing Director/Chief Executive Officer, Fidelity Bank Plc, Nnamdi Okonkwo, said the company’s financial performance is reflective of the general slowdown in business activities due to lower government revenues, which is direct fallout of the free fall in international oil prices.

 

According to him, rising inflation rate, lower disposable income and tougher operating environment for most sectors of the economy as well as the impact of the devaluation on asset quality has all together impacted financial performance.

 

“Despite the headwinds above, we continued with the disciplined execution of our medium term strategy and recorded decent growth on key operational metrics; deposits, loans, net interest income, electronic banking income and operating income”, Okonkwo explained.

Net Interest Margin (NIM) declined from 6.9 per cent 2015 to 6.5 per cent in H1 2016 despite a drop in its funding cost from 6.2 percent 2015 to 4.2 per cent H1 2016.

 

“This was due to a 2.0 per cent drop in the average yield on its earning assets driven by lower yields on liquid assets and a reduction in lending rates for some sectors of the economy which ultimately resulted in aggregate yields on earning assets declining faster than funding costs”, said the Bank Chief Executive.

 

Risk assets grew by 23.0 per cent (N132.9 billion) from December 2015 with the 40 per cent devaluation of the local currency (naira) accounting for 15.6 per cent (N89.9 billion) of the bank’s loan growth.

 

Foreign currency loans currently constitute 43.7 per cent of total loans up from 38.1 per cent in Q1, 2016 due to the currency devaluation.

The organic loan growth of 7.4 per cent was principally driven by on-lending facilities to the public sector. Cost of risk spiked to 1.4 per cent in H1 2016 due to the N4.0billion impairment charge taken in Q2, 2016.

 

“We have taken a very prudent view of the impact of the currency devaluation, tougher operating environment and declining consumer disposable income on selected sectors of our loan portfolio”, he said.

 

The bank’s NPL ratio declined to 3.4 per cent largely due to the growth in the loan book, Fidelity Bank has maintained a conservative approach going forward, adding that the lender revised its cost of risk guidance while focusing on keeping its NPL ratio below 5.0 per cent.